Debt Rattle October 23 2014
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DPC Bromfield Street in Boston 1908 • Bond Funds Stock Up On Treasuries In Prep For Market Shock (Reuters) • Investors Pull Shale Money, Put Brakes on
[See the full post at: Debt Rattle October 23 2014]Mother of God; Costas Lapavitsas’ video is just appalling. I mean hell, just look at the audience.
He’s spouting economics at a level that is just a guaranteed non-starter.
Financialization just isn’t that difficult to explain.
Financialization is the privatization of everything that used to be a social, government funded benefit.
Fuck all, no wonder the U.S. is a walking, talking piece of propagandized shit!!!
I like TRNN, but this is just a fail!I know one has to take Ambrose with a big grain of salt. But a few months ago he said something that really struck me, “sooner or later there is going to have to be a debt Jubilee”. (I’m paraphrasing what I remember). A Debt Jubilee. That could be EXACTLY what they do. Write it off. Write it all off.
They could declare some sort of financial reset and everyone starts over at zero? Could be why the governments are not too concerned at the huge numbers they appear to be running up. It isn’t like our debt, which we have to pay back. Of course Ambrose didn’t give particulars as to how this would work! But I could believe it. What do you think?
khiori,
A king in the past could declare a debt jubilee because in the end all debt was owed to him anyway, even if it was through a few middlemen (they owed him too). These days, such kings don’t exist, and debt is owed to many different parties. Plus, amounts of debt vary much more today than in days of old. The US owes China a lot more than vice versa. How do you solve that kind of problem. Your neighbor who’s underwater on a million dollar MacMansion owes much more than frugal you. But what’s more, his debt has been sold on to global markets in securities packages. Which raises the question why a Japanese investor would cancel your neighbor’s debt. The negotiations and litigation concerning a debt jubilee would take so long, if anyone even tried, that even if the issues could be resolved, it would be too late.
We certainly seem to have kings enough today, just on private yachts and not thrones.
This why you wouldn’t have a “jubilee,” heavens no! Because the little people owe the big people. The right people are owed and the unimportant people owe them: that won’t change. You think after 200 years banks suddenly forgot all about prudent lending one day in 1996 by pure accident? No. More debt means more sale of the Important People’s product: debt. And like Mexico, when the US Peso goes down all the currency will drop, but all the debt will be revalued. UP. Into the new currency. So you may have a 1/3 decline, another 1/3 decline, then another 1/3 decline a year or two later to finally equalize balance-of-payments, leading to the correct valuation of the country and currency. This is what happened in the Great Depression as well except they somehow “Lost” your savings accounts, but “remembered” all about your mortgage owed. Same basic mechanics.
You borrowed $120k, and still owe it. No harm right, except that the economy’s tight? that’s 3x your average $40k income–you can chart it honestly by measuring number of hours worked. …But not if the debt owed is $120k, but income falls with the devaluation of the US Peso to $20k/year and your $120k remains, that doubles your effective debt. –Measured by the hours of your life.
But it doesn’t have to be that way: they can also unilaterally invent that debt is owed in “New Republic Dollars”, which happen to be worth 2x the old FRN dollars, your income stays at $40k “Green, Domestic Dollars” and the debt rises to $240k. …The same, and all perfectly fair, you see. Because “The Market” or something, la-dee-da.
Worldwide, who owes whom? They sit down–as nations have done many times (the Washington Agreement comes to mind)–and decide that the US$ will drop 30%, China rises 40%, Japan -10%, Russia +60%, Italy -30%, and so on. Then peg their currencies to make it so, in the same simularicum of free market currency trading we have today. Or we could just go to a real standard, a gold/oil/trade backed Yuan/Ruble/BRIC, and let the currencies adjust the same numbers but without the bother of market-rigging by Central Banks.
Point is, this IS a debt jubilee. For some. It stops the fiat exponential increase to infinity. It’s a debt/currency reset. Either at the negotiating table (most likely), or by the market itself (unlikely). But one thing you can sure of is that it will NOT be a debt forgiveness by the strong to help the weak. Quite the opposite. And whoever is defaulted on will be out for blood…if only they retain enough power to seek for it.
It’s a currency reset. White papers existed in 1970, before the US even left the gold standard, that say they knew how long fiat systems last, what they would do before, during, and after the fiat system, and why in the last years of the system-to-scuttle, it made sense to steal everything that wasn’t tied down. It was all going to collapse anyway; it must, on the 40-year mark: so why wouldn’t you?
The other way to declare a jubilee is to simply revalue the only asset on central bank balance sheets that is not someone else’s debt. That would allow all the world’s debt to be repaid in nominal terms, while at the same time immediately restoring solvency to the entire global financial system in one fell swoop. Simply revalue gold at $100,000 per ounce by fiat (by declaring this to be the open bid that central banks are willing to purchase gold). It throws everything into chaos for a couple of months, but it’s simplest, cleanest way to manage a reset.
Raul, Thank you for explaining about kings. That’s not common knowledge in America. I wonder why Ambrose thought that would be the answer then???
Unless, Diablo, he was thinking along the lines of your scenario? FWIW I didn’t think Ambrose meant MY debt, LOL. Some people speculate that how much we owe China is why they are getting some good prices on real estate. I mean the big purchases.
Boogaloo (and all) I keep hearing about this currency reset, but only on blogs. It sounds to me like something the rich people might try to fight against, so I’m not sure I see them all sitting down together. Guys like Paul Singer would start banging heads!
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